Qatar Central Bank’s floundering policies leads country to historic deficit

Mohamed Abdelghaffar

Despite the vast oil resources that Doha enjoys naturally, which can only express a stable, stable and evolving economic situation, the policies of its regime have made the Qatari economy suffer, as national banks became mired in deficits and debt.

Qatar Central Bank, is the primary bank in the country, which has the right to set the economic policy and financial vision for Doha, however, its policies have been floundering and unclear for a long time.

In January 2018, the Qatari Central Bank announced the start of dealing in virtual currencies, noting that it is an opportunity to build the entire economic future, as stated in its official statement.

The move encouraged citizens and residents of the country to buy virtual currencies, and the emergence of electronic exchanges as well, in preparation for the move by the bank.

By the end of February 2018, however, bank warned financial institutions in the country not to trade in bitcoin or other cryptocurrencies.

The letter sent to financial institutions by the Qatar central bank said it “politely requested banks and exchange houses in the country not to deal in any way with this currency, or exchange it with another currency, or open accounts to deal with it, or send or receive any money transfers for the purpose of buying or selling this currency”.

The central bank added that failure to comply with its request could result in penalties under existing legislation.

According to an official report issued by the Qatar Bank, March 23, 2020, the net deficit of foreign exchange funds with the bank until February 2020 reached 45.3% on an annual basis compared to the same period last year 2019.

The bank’s foreign funds deficit increased from 219.39 billion riyals ($60.3 billion) in 2019 to 318.8 billion riyals ($87.63 billion) in 2020.

The deficit of net foreign funds at the Qatari Bank increased monthly by 5.1% during the month of February, which indicates the possibility of increasing the percentage during the coming months.

This contributed to the weakness in the volume of foreign investments inside the country, in addition to the continuous decline in foreign exchange earnings, and the creation of a crisis in financial liquidity from foreign currencies within the various Qatari banks.